Quote of the Day

The International Monetary Fund (IMF) just once again reduced its global growth forecast, which was already the lowest since the 2008 financial crisis.

Here, from their narrative, is the essence of the problem:

“The principal risk factor to the global economy is that adverse developments — including further U.S.-China tariffs, U.S. auto tariffs, or a no-deal Brexit — sap confidence, weaken investment, dislocate global supply chains, and severely slow global growth below the baseline,”

As you know, I sympathize, completely!

Of course, the thing is, the U.S. stock market continues to melt higher — Dow’s up triple-digits as I type on (mostly) a debt/spending deal in Congress — while macro uncertainty continues to grow. Reminds me of one of my favorite Jesse Livermore quotes:

“Not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a [trader] needs to know to make money is to appraise conditions.”

Our appraisal of “conditions” is that we remain in the midst of an expansion and, thus, a bull market. The trajectory, however, of much of the data that instructs our appraisal is in the wrong direction, for reasons that an interest rate cut, more money printing and higher government debt (à la today’s rally) — while short-term good for asset prices — simply can’t by themselves fix. In fact, without resolution of the fundamental reasons the IMF is reducing its forecast, boosting asset prices here will only make the ultimate corrective phase all the more painful…


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